Ashmore upbeat on emerging markets despite tough half year

25th Feb 2014 08:28

Asset manager Ashmore saw first half profits dive by a third as it counted the cost of investor wariness over emerging markets against a backdrop of the US winding down its bond-buying stimulus programme. The group sought to underline its confidence on outlook by hiking the interim payout. For the six months to December 2013, Ashmore saw Assets under Management (AuM) decline 2.7% to $75.3m as a result of net outflows totalling $2.9bn. Interim pretax profits fell nearly 34% to £79.5m from £120.2m on net revenue of £134.6m, down from £163.7m. Basic earnings per share came in at 9.23p, down from 13.94p last time. Despite the disappointing performance the group assured its three and five-year investment track records remain strong, with 95% and 96% of AuM outperforming the relevant benchmarks, respectively, for those periods. At the end of December 2013, 38% of Group AuM had outperformed relevant benchmarks over one year compared with 96% at June 30th 2013. Ashmore attributes this sharp drop in short-term performance largely to weakness in local currency funds - the asset class that was most adversely affected by the price volatility and industry outflows during the period. Commenting on the results, Mark Coombs, Ashmore's Chief Executive said: "The group has continued to make operational and strategic progress, but these financial results reflect the weak market backdrop which existed for much of the period. Coombs believes that the recent instability across the emerging markets in which it invests has in fact created attractively valued securities. The group is convinced that "the economic and political fundamentals remain positive across many of the countries that comprise the diverse emerging markets investment universe". Coombs added: "Ashmore has experienced and capitalised upon similar conditions before, and its long-standing and robust investment processes are well placed to deliver attractive returns for clients over the cycle." To underline the group's strong capital position and management's confidence about the outlook for the business the interim dividend has been hiked to 4.45p per share from 4.35p last time.At 09:19 Ashmore shares were down 7.9% or 29p to 313p, valuing the group at £2.2bn. KP